II. Recent Updates:
1. PRASAD KOCH TECHNIK TECH PVT. LTD. Vs. ASSISTANT COMMISSIONER OF INCOME (OSD) - TAX, SPECIAL CIVIL APPLICATION NO. 16074 OF 2011. DATE : 02/12/2011, HIGH COURT OF GUJARAT
Reopening not for roving enquiries and scope of sec. 40(a)(i) Vis a vis Foreign supplier raw material payment
For the assessee to deduct tax at source, it was necessary that the payee had liability to pay any tax on such payment in India. In the reasons recorded, there is not even a prima facie belief or disclosure that on what basis, the Assessing Officer has formed his reason to believe that such payment to the foreign supplier attracted tax in India. In absence of any live link with the reasons recorded and the belief formed, we are of the opinion that the notice was wholly invalid.
The Assessing Officer cannot be permitted to reopen the assessment only for fishing enquiry. Significantly, before issuing notice for reopening the assessment, the Assessing Officer had gathered the assessee's views on the nature of payment made. The assessee had firmly contended that the payments did not incur any tax liability in India on the supplier. Without any further enquiry, the Assessing Officer straightaway issued notice for reopening such assessment. As we have already held, the Assessing Officer did not have any basis to permit the Assessing Officer to form a belief that income chargeable to tax in case of the assessee had escaped assessment. Rule is made absolute.
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2. KIMPLAS TRENTON FITTINGS LTD. Vs. ASSTT COMMISSIONER OF INCOME TAX, MUMBAI, WRIT PETITION NO. 2140 OF 2011, DATED: 22/11/2011. HIGH COURT OF BOMBAY
Whether assessment can be re-opened beyond four years when all primary facts for making the claim were disclosed to the AO.
Where the re-opening is beyond four years, the escapement of income is not sufficient in itself to validate the reopening. The jurisdictional requirement where an assessment is opened beyond four years is a failure to disclose all material facts necessary for the assessment. Unless that condition is fulfilled, the re-opening cannot be sustained; all primary facts for making the claim were disclosed to the AO. Even assuming that there was an error on the part of the AO that cannot legitimately be the basis for re-opening assessment beyond four years unless a failure of the assessee to disclose truly all material facts for the assessment caused it. That is not the case here. It is not possible to come to the conclusion that there was a failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment. Notice u/s 148 set-aside.
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